News Summary

A hearing to evaluate Atlantic Coast Life Insurance’s ability to offer new policies has been postponed, raising concerns about the company’s financial stability. Following scrutiny from state regulators, Atlantic Coast was prohibited from writing new life policies after December 31, 2024. This delay gives the company additional time to address mounting worries about several financial discrepancies and the impact of a Bermuda reinsurer’s insolvency. Stakeholders now await further developments in March concerning A-Cap’s appeal against regulatory actions.

South Carolina’s Insurance Hearing Postponed Amid Concerns for Atlantic Coast Life Insurance

In a surprising twist, a hearing regarding Atlantic Coast Life Insurance’s ability to offer new policies has been postponed, leaving many wondering what this means for the future of the company. Originally set for this past Friday, the hearing is now scheduled for Wednesday, giving those involved a bit more time to prepare.

Atlantic Coast Life Insurance is owned by Advantage Capital Partners, often referred to as A-Cap. This company has found itself in the spotlight recently, with South Carolina regulators casting a shadow of doubt over its financial stability. Because of concerns about its poor financial condition, the state has prohibited Atlantic Coast from writing new life policies after December 31, 2024. This regulatory order also extends to Southern Atlantic Re, another insurer under the A-Cap umbrella.

Key Developments in the A-Cap Saga

On the eve of what was supposed to be a significant hearing, Chief Administrative Law Judge Ralph King Anderson III granted a stay on the order just before the deadline. This pause allowed Atlantic Coast to breathe a little easier, at least temporarily. However, it does not erase the ongoing worries about its financial health.

A-Cap has also curtailed new business at its Sentinel Security Life Insurance Company, headquartered in Utah. Just like in South Carolina, Utah regulators have stepped in, preventing Sentinel and its affiliated reinsurers, Haymarket Insurance Co. and Jazz Reinsurance Co., from writing new business past the same deadline. A hearing for A-Cap’s appeal against the Utah order is set for March, adding another layer of complexity to this already tangled web.

Regulators Raise Red Flags

During the initial hearings, Judge Anderson mentioned he wasn’t entirely convinced of the financial insolvency claims being thrown around about Atlantic Coast and its larger family of insurers. Still, the South Carolina Department of Insurance has raised significant alarms. They argue that Atlantic Coast has been shifting its financial obligations to a Bermuda-based reinsurer, 777 Re, Ltd., which has recently lost its license and stopped operations. The insolvency of this reinsurer is a crucial element in indicating Atlantic Coast’s precarious financial status.

Despite the swirling doubts, a representative from A-Cap has assured stakeholders that Atlantic Coast is keeping up with all financial responsibilities and boasts a positive cash flow thanks to its pre-need insurance business. However, this assurance clashes with a report from earlier this year that placed Atlantic Coast Life Insurance and Southern Atlantic Re under confidential supervision due to alarming financial indicators.

Financial Discrepancies and Concerns

Among the troubling signs raised by regulators is the accuracy of Atlantic Coast’s asset reporting. Initially reporting an astonishing risk-based capital ratio of positive 1,353%, this figure was later found to have been adjusted to a staggering negative 19,700%. This major discrepancy has raised eyebrows among regulators, who are now poking deeper into the company’s financial practices.

The South Carolina regulators also referenced a credit rating report that identified glaring concerns about A-Cap’s overall risk management strategies. In light of all these issues, it seems that A-Cap is in a tough spot. While the company is committed to collaborating with regulators, they disagree vehemently with claims of their undercapitalization.

The Bigger Picture

This predicament is not an isolated incident. Similar concerns of financial volatility have previously led Utah regulators to take action against other A-Cap-owned insurers last year. As the situation continues to unfold, stakeholders are preparing for what could be a challenging path ahead.

With so many moving parts and a lot at stake, those keeping tabs on Atlantic Coast Life Insurance, its affiliates, and their policyholders will undoubtedly have their eyes glued to the upcoming hearings and what they might reveal about the future of this troubled insurer.

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